Indian consumers behaviour

Indian consumers are lapping up high-end electronics, mobiles and durables like never before. Not afraid to shell out the moolah, consumers are going all out for top-of-the-line products across categories.

Leading the pack are smartphones, tablets, high-definition televisions, frost-free refrigerators and split air-conditioners which have grown as much as 80% annually. So while sales of flat-panel televisions registered an 84% growth, split air-conditioners (AC) grew by 62% and smartphones grew by 40% last year.

Durable majors like LG, Samsung and Godrej are now drawing around 40% of their overall turnover from these premium products. Even handset manufacturers like Nokia have upped their ante with a slew of launches in the high-end price range of Rs 15,000 and above to tap this market which grew 40% last year.

Industry players say today's consumers are flexible on their budgets and with the increasing penetration of modern retail these products have got the desired push. "Premium categories are leading the segments linked with early technology adoption and higher disposable incomes of Indians, which is helped by their propensity to spend," said R Zutshi, deputy MD, Samsung India. The Korean durable major clocked a growth of 90% in flat panel televisions in 2010 and is expecting 100% growth this year, just like the other major players in this category, driven by the growth in high-definition (HD), LED and the 3D segments. This year flat panel TVs are expected to double and touch the 5 million unit mark. HD televisions currently constitute 15-20% to the overall sales of flat panel televisions.

The change in consumption pattern has also meant that companies have re-oriented themselves to suit this increasing demand. Over the last two years, LG has tweaked its positioning from being a mass brand operating on competitive pricing platform to one which is laying focus on premium products. "Today the average price points for our products have gone up considerably as consumers are now willing to pay a premium for quality," says YV Verma, COO, LG Electronics India.


High-end flat panels of 42 inch and above contributed 32% to LG's sales last year while 30% of the company's washing machines sold were front loading. Like Samsung, LG, too is looking to clock a100% growth in flat panel display over last year. In fact, the air-conditioning market boasts of as much as 70% split ACs today showing the acceptance of these products.

The country's largest mobile handset maker by market share, Over the last six months, Nokia has introduced as many as seven new models in the top-end segment. The smartphone market with a price point of Rs 15,000 and above is estimated to be around 3 million units annually. "The growth in this segment is one of the fastest and, therefore, we will continue to make our investments here," says Viral Oza, head - activation, media and online marketing, Nokia India. Companies are also banking on consumers increasingly looking to upgrade to high-end and lifestyle products. Says George Menezes, COO, GodrejAppliances, "Indians are now upgrading even if there is no need to do so and what has helped them is the fact that today the gap between mid-tier and the top-end products has come down considerably."

The growth in the fully automatic washing machines and frost free refrigerators have been much lower but then historically the growth in this two product segments has been low.